Personal Financial Management + Stewardship Final

factors that affect price of vehicle insurance premiums

value of vehicle, driving record, type of vehicle, marital status

property insurance gives protection for:

replacement cost of items, content within property, structures on property

co-insurance

percentage that is shared costs of expenses by the insured and insurance provider until max out of pocket is met

deductible

amount you will pay before you your insurance will cover the expenses of the claim

coverage limit

max amount your policy will pay out for the event

beneficiary

person who receives the benefit of the payout

premium

amount you pay for insurance policy

max out of pocket

max amount the policy holder will pay after deductibles and co-insurance are met

HSA (Health Savings Account)

provides tax savings in the fact that it lowers your taxable income equally with the contributions to your account; can be used for medical expenses, such as deductibles, co-insurance, vision and dental for the whole family

underwriting

process by which an insurance company decides who to insure, how much to insure, and the premiums to charge

property damage liability coverage is enacted when

the policy holder has people who have gotten hurt on their property

you can decrease your premium by increasing your deductible

true

medicaid

provides coverage to low-income individuals and families; joint service from federal and state; impacted by obamacare

US Healthcare system

hybrid of both single and multi-payer as well as self-pay

Medicare

designed to help people over the age of 65

FSA

spending account, employer owned, connected to basic health insurance policy, use it or lose it, max contribution is $3200

banks make money by charging their customers interest on savings accounts and giving interest to customers on their loans

true

auto expenses

NOT an itemized expense

earned income tax credit is refundable tax credit for low to moderate income workers

true

taxable income =

adjusted gross income - deductions

money market account

hybrid between checking and savings; require higher minimum balance and higher interest than typical savings account; FDIC insured

certificate of deposit

higher interest than typical savings; FDIC insured; time locked savings account

form received each January for each place of employment

W-2

budget variance

difference between what you plan to spend or save and what you actually spent or saved

long term capital gains tax is higher in percentage than ordinary income tax brackets

true

allowances

what a W-4 helps an employer know how much tax to take out

recommended amount to save for an emergency fund

3-6 months of monthly expenses

50/30/20 method to budgeting

50% goes to needs, 30% to wants, and 20% to saving. Done after 10% is given to tithing

1099 form

given at the end of the year to indicate freelance or contract work

FICA tax

makes payments in for social security and medicare

gross income

full amount of earnings

liability

money you will need to pay back (debt)

insurance permiums are recorded on

income and expense sheets

rule of 72

How long it takes for the investment amount to double based on the annual interest rate. Ex: annual interest rate of 6% would take 12 years to double the investment --> 72/6 = 12

annuity

making regular payments on a loan or regular additions to an investment

future value

how much a sum of moneu will be worth sometime later

present value

the value of a future amount of money in today’s dollars

time value of money

the concept that a dollar today is worth more than a dollar received in the future

balance sheet is a financial document that reports:

assets, liabilities, net worth or assets under management

time

the most important part to compounding

social security

government retirement plan for its citizens, anti-poverty plan developed in the 1930s after and through the great depression, insurance for disabled citizens, survivor insurnace

index fund

a fund that tracks the performance of a market index, such as the S&P 500

4% rule of investing/retirement

A retirement planning rule of thumb that states if you take out 4% of your savings at retirement, and take out that same amount adjusted for inflation for the following years,  you should have enough to last for 30 years.

securities examples

bonds, ETF, Mutual Funds, Stocks

speculating

short term buying and selling of securities in which future value and expected return are highly unpredictable

executor

person in charge of completing the goals of a will

grantor

person who creates/starts the trust

trustee

person who adminsters the trust property in accordance to the written trust agreement

types of investments from highest risk to lowest risk

speculating

stocks

mutual funds

bonds

US treasury bills

automated reinvestment plan

A plan that gives share owners the option of electing to have dividends and capital gains distributions reinvested in additional fund shares

required rate of return

minimum rate of return that you believe you should receive in compensation for the amount of risk that you must assume

S&P 500

stands for standard and poor’s 500, the top 500 publically traded companies that currently hold the greatest market capitalization, investing in an ETF that reflects the S&P500 is a great way to diversity your investments easily

investing porfolio

collection of investment vehicles assembled to meet the investment goal

vesting

used as an incentive for employees to stay with a company for a specified number of years in order to receive full employer retirement contributions or stock options

current income

money received from different investment vehicles such as dividends, bonds, or rents from real estate

rate of return equation

(end value -beginning value) / beginning value = rate of return

diversification

spreading your risk by investing in multiple types of stocks or multiple investment methods

living will

type of will used to determine the desires of the individual if they no longer have the mental or physical capacity to make a decision